Leanne Oitmaa from our Law & Trade Marks team reviews the decision in KFC THC V Ltd v Grill’d IP Pty Ltd  ATMO 192.
Grill’d – a popular Australian burger chain with over 160 restaurants around the country – recently applied to register the trade mark “HFC”, claiming various foodstuffs – including fried chicken. Grill’d uses “HFC” to refer to “Healthy Fried Chicken” on their menus. Unsurprisingly, American fast food giant, KFC opposed the application, but its opposition was unsuccessful.
KFC raised the following grounds of opposition:
- Substantial identity or deceptive similarity with its own Australian registered trade marks, including its trade mark for “KFC”;
- Use of HFC is likely to deceive or cause confusion because of the significant reputation of KFC trade marks in Australia;
- Use of HFC would be contrary to law owing to a contravention of s18 of the Australian Consumer Law; and
- The application was made in bad faith.
HFC not substantially identical with, or deceptively similar to, KFC
While the hearing officer disagreed with Grill’d’s submission that “FC” was an obvious contraction of “fried chicken” (in part because both parties’ trade marks also claimed other foodstuffs), they concluded that the marks were not deceptively similar on the basis that:
- the marks are initialisms rather than acronyms, meaning that the letters of the marks are not pronounced as a word, but rather as individual letters (i.e. “H-F-C” and “K-F-C”);
- the marks were conceptually different because “H” was a reference to the word “healthy” and “K” for “Kentucky”; and
- the Full Court’s decision in Australian Meat Group Pty Ltd v JBS Australia Pty Limited  FCAFC 207 in which the Court found that “AMG” and “AMH” were not deceptively similar, even though the letters “AM” would be understood by consumers to mean “Australian Meat”, ought to be applied. Influenced in part by this decision, and presumably because the letters “K” and “H” appear at the beginning of the KFC and HFC trade marks, the Hearing Officer was satisfied that the marks are not deceptively similar.
Reputation in KFC not likely to cause deception or confusion
Although the Hearing Officer acknowledged KFC’s substantial reputation in the KFC trade mark in Australia, they were not satisfied that because of that reputation, use of HFC was likely to deceive or cause confusion. Rather, the significant reputation in the KFC trade mark served only to mitigate against deception or confusion. In other words, KFC is too famous for consumers to wonder whether it may be related to HFC.
Furthermore, as the test for misleading or deceptive conduct under the Australian Consumer Law is more stringent than the test under section 60, KFC’s argument that use of HFC would be contrary to law also failed.
“Cheeky” advertising does not equal bad faith
The Hearing Officer had to decide whether, in view of Grill’d’s knowledge of KFC and KFC’s reputation, as well as ‘cheeky’ advertising it had made, examples from the case shown below, falls short of the standards of reasonable commercial behaviour.
The Hearing Officer firstly rejected KFC’s argument that Grill’d’s application was designed to unfairly exploit KFC’s reputation in the KFC trade mark.
Secondly, the Hearing Officer recognised that Grill’d had engaged in what the applicant called ‘cheeky’ comparative advertising using some of KFC’s indicia in its advertising (e.g. red and white vertical stripes on buckets of chicken) however it was ‘not dishonest, or even unusual, business practice—particularly in the Quick Service Restaurant industry—to engage in advertising that brings another trader to mind in an amusing way, even if that annoyed the other trader’.
Furthermore, as Grill’d had not used any of KFC’s indicia in the trade mark itself, the filing of the trade mark application could not be said to be in bad faith.
- It can be more difficult to establish substantial identity or deceptive similarity where the two trade marks are initialisms as opposed to acronyms.
- It remains difficult to argue that use of a trade mark is likely to deceive or confuse where there is a very significant reputation in a well-known mark.
- ‘Cheeky’ elements of comparative advertising that do not appear in the trade mark as filed are insufficient in themselves to prove that a trade mark application was filed in bad faith.